State-owned French utility EDF said its performance for 2022 will be impacted to the tune of billions of euros by the electricity price cap imposed by the French government.
France’s energy and environment ministry on Thursday said EDF must increase the volumes of nuclear power it sells to its smaller competitors this year by 20 terawatt-hour (TWH) to 120 TWH in order to keep market prices down.
The price at which EDF will have to sell that electricity will be increased to 46.2 euros per megawatt-hour (MWH) from the current 42 euros. However, that price is still below EDF's actual production costs and far below current market prices of more than 100 euros per MWH.
EDF said in a statement that the price cap would impact its EBITDA for 2022 by around €8.4 bn based on the market prices on 31 December 2021 and by around €7.7bn based on the market prices on 12 January 2022.
“The final impact on the group’s EBITDA will depend on the market prices over the implementation period,” EDF said, as it withdrew its 2022 EBITDA guidance.
The group added that it will consider appropriate measures to strengthen its balance sheet structure.
Finance Minister Bruno Le Maire told the French daily Le Parisien on Thursday that without the new price cap new measures, power prices would jump by more than 35% instead of 4 % on 1 February.
He said the European Commission had approved the French government's plan.